Amazon's New York headquarters eligible for Trump tax break
The New York City neighborhood hand-picked by Amazon to house one-half of its new headquarters qualifies as a federal “opportunity zone,” a classification created by President Trump’s tax reform law last year that offers incentives like capital gains tax breaks to developers who are investing in low-income areas.
The problem? According to some critics, the rapidly growing Long Island City – the median household income around Amazon’s planned campus is about $130,000 a year – doesn’t necessarily qualify as low-income or high-poverty.
“Long Island City doesn’t strike me as high on the list for needing extensive tax incentives to stimulate economic development,” Don Peebles, a New York real estate developer told the Associated Press.
The Trump administration allocated about $100 billion in private capital toward creating jobs and economic development in the 8,761 areas identified by the Treasury Department. On top of potentially millions of dollars in tax breaks, incentives include the deferral of tax on prior gains as late as 2026 if the amount of the gain is invested in an opportunity fund and tax forgiveness on certain investment gains if the investor holds on to it for at least 10 years.
“You can take your hard-earned capital and put it to work making a difference in poor people’s lives right away without having the tax guy get in between you and the poor people,” Kevin Hassett, chair of the Council of Economic Advisers, told FOX Business in October.
But Long Island City has experienced a drastic and rapid transformation over the past few years (it’s been dubbed the fastest-growing neighborhood in the city and in the country) as it undergoes the effects of gentrification, according to the Long Island City Post. In 2017, for instance, the area had the most apartments built out of all of New York City’s five boroughs; and since 2010, the community has built more than 9,150 units.
New York already offered Amazon performance-based incentives worth $1.525 billion, according to the e-commerce giant. That means unless Amazon fulfills its promise to create 25,000 new jobs, it won’t receive the money. Of that $1.525 billion, the world’s largest online retailer will be given a refundable tax credit worth about $1.2 billion over the course of the next decade for the salaries it will pay workers.
But Amazon and CEO Jeff Bezos -- the richest man in the world -- are known for taking advantage of tax loopholes. In 2017, the e-commerce behemoth raked in more than $5.6 billion in U.S. profits, but essentially paid $0 in federal income taxes.
The headquarters announcement on Tuesday drew the ire of Congresswoman-elect Alexandria Ocasio-Cortez, in addition to other New York Democrats.
“Amazon is a billion-dollar company,” Ocasio-Cortez wrote on Twitter. “The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.”
The second headquarter location in Arlington, Virginia, is not a designated “opportunity zone,” nor is Nashville, which will be the cite of Amazon’s new operations hub.
Amazon could not be reached for comment as of publication time on Wednesday.
The Associated Press contributed to this report.
